2013 Supplement to the Minnesota Tax Handbook

Transcription

1 2013 Supplement to the Minnesota Tax Handbook This supplement to the 2012 Edition of the Minnesota Tax Handbook contains the major tax law changes enacted in The page references are to the 2012 Edition. Also included are the current rates for the major state taxes, the property tax class rates for taxes payable in 2014, and state tax collections for fiscal year The 2012 Edition of the Minnesota Tax Handbook can be found on the Department of Revenue web site at Minnesota Department of Revenue Tax Research Division February 2014 STATE TAXES History of Major Changes Individual Income Tax, Page Fourth bracket with a tax rate of 9.85% enacted for taxable income exceeding $250,000 for marriedjoint returns, $125,000 for married-separate returns, $150,000 for single persons, and $200,000 for heads of households. Rate for the alternative minimum tax increased from 6.4% to 6.75%. Research credit made nonrefundable. Historic structure rehabilitation credit extended for six years. Greater Minnesota internship credit enacted (1/1/14). Corporate Franchise Tax, Page Foreign royalty subtraction repealed. Foreign operating corporation provisions repealed. Definition of Minnesota sales modified for unitary groups. Minimum fee thresholds and amounts increased; indexed for inflation (1/1/14). Research credit made nonrefundable. Historic structure rehabilitation credit extended for six years. Greater Minnesota internship credit enacted (1/1/14). Estate Tax, Page Taxable estate extended to include gifts made within three years of death. For a nonresident decedent, Minnesota property held in a pass-through entity subject to tax.

2 Gift Tax 2013 Gift tax of 10% enacted, with a life-time credit of $100,000. General Sales and Use Tax, Page Exemption enacted for purchases by cities and counties. Tax imposed on business purchases of electronic and commercial equipment repair and maintenance services and on warehousing and storage services. Exemption for telecommunications equipment repealed. Refund requirement for capital equipment exemption repealed (9/1/14). Tax imposed on specified digital products. Out-of-state retailers required to collect the sales tax if they have an agreement with a Minnesota resident or business to refer customers by a link on a web site. Exemption enacted for aircraft parts and labor for general aviation. Exemption enacted for all purchases made by qualifying businesses that expand in Greater Minnesota, limited in total to $7 million per year. Exemption of construction materials enacted for: a qualifying research facility; an industrial measurement facility; a biopharmaceutical facility; and a destination medical center. Rate for the motor vehicle rental tax increased from 6.2% to 9.2%. Motor Vehicle Sales Tax, Page Exemption for sales between individuals limited to certain family members. Flat tax on collector vehicles increased from $90 to $150. Motor Fuels Excise Taxes, Page Aviation fuels tax for jet fuel increased from 5 to 15 per gallon; eliminated refund of a portion of the aviation fuels tax based on volume except for companies paying the airflight property tax (7/1/14). Alcoholic Beverage Taxes, Page Qualification for the small brewers credit increased from less than 100,000 barrels to less than 250,000 barrels. 2

3 Cigarette Taxes and Fees, Page Tax increased to $2.83 per pack from total tax and fee of $1.23. Fee of 75 per pack eliminated. Tax rate indexed (7/1/14). In-lieu sales tax increased from 6.5% to 6.875%. Nonsettlement fee increased from 35 to 50 per pack. Little cigars subject to the same tax as cigarettes, including the in-lieu sales tax and the nonsettlement fee, instead of being subject to the tobacco products tax and general sales and use tax. Tobacco Products Tax and Fee, Page Tax rate increased to 95% of wholesale price from a total tax and fee of 70%. Fee of 35% eliminated. Minimum tax of $2.83 per container imposed on moist snuff. Premium cigars subject to a maximum tax of $3.50 per cigar. Insurance Premiums Taxes, Page Historic structure rehabilitation credit extended for six years. Aircraft Registration Tax, Page Structure of the tax changed from 1% of base price, reduced for depreciation after the first year and subject to a minimum tax, to a tax schedule by range of base price. LOCAL TAXES General Property Tax, Page Property tax refund increased for homeowners in the middle to high end of the income range. Property tax refund increased for renters in the high end of the income range; maximum refunds increased. Class rate reduced for class 4d, low-income rental housing for market value of each unit over $100,000 (pay 2015). Mining Production Taxes, Page Rate set at $2.56 per ton for

4 Rates of Major State Taxes As of January 1, 2014 Individual Income Tax: Tax Year 2014 Rates and Taxable Income Brackets 5.35% 9.85% up to 7.05% 7.85% over MJ $36,080 $36,081- $143,350 $143,351- $254,240 $254,240 MS $18,040 $18,041- $71,680 $71,681- $127,120 $127,120 S $24,680 $24,681- $81,080 $81,081- $152,540 $152,540 HH $30,390 $30,391- $122,110 $122,111- $203,390 $203,390 Corporate Franchise Tax: 9.8% General Sales and Use Tax: 6.875% Liquor Gross Receipts Tax: 2.5% Motor Vehicle Rental Tax: 9.2% Motor Vehicle Rental Fee: 5% Motor Vehicle Sales Tax: 6.5% Highway Fuels Excise Taxes: 28.5 per gallon Alcoholic Beverage Taxes Distilled spirits: $5.03 per gallon Beer: more than 3.2% alcohol $4.60 per barrel 3.2% or less: $2.40 per barrel Wine: $.30 - $3.52 per gallon Cigarette Tax: $2.83 per pack of 20 cigarettes Tobacco Products Tax: 95% of wholesale price Mortgage Registry Tax: 0.23% of principal debt Deed Transfer Tax: 0.33% of consideration MinnesotaCare Taxes: 2% of gross revenues for health care providers, hospitals, surgical centers, and wholesale drug distributors. Motor Vehicle Registration Tax: $10 plus 1.25% of base value based on age for passenger cars, pickup trucks, and vans. Trucks, tractors, and buses based on type, weight, and age of the vehicle. State General Property Tax: for taxes payable in 2014, 52.16% of the net tax capacity for commercial and industrial property; % for seasonal recreational property. 4

5 Class Rates for Major Classes of Property for 2014 Class and Type of Property Net Class Rate 1a Residential homestead First $500,000 market value (MV) 1.0% Over $500,000 MV 1.25% 1b Homestead of blind or disabled First $50,000 MV 0.45% Excess is Class 1a or 2a 1c Homestead resorts First $600,000 MV 0.5% Next $1,700,000 MV 1.0% Over $2,300,000 MV 1.25% b 1d Seasonal farm worker housing - same as Class 1a 2a Agricultural homestead House, garage, and one acre - same as Class 1a Remaining land and buildings First $1,500,000 MV 0.5% a Over $1,500,000 MV 1.0% a Nonhomestead agricultural land 1.0% a 2b Rural vacant land 1.0% 2c Managed forest land 0.65% a 2d Private airport 1.0% a 2e Unmined commercial aggregate deposit land 1.0% a 3a Commercial and industrial, utility real property First $150,000 MV 1.5% b Over $150,000 MV 2.0% b Public utility machinery 2.0% b 3b Employment property same as Class 3a b 4a Apartments, 4 or more units; private hospitals 1.25% 4b Residential or farm nonhomestead, 2-3 units; manufactured homes 1.25% 4bb Residential or farm nonhomestead, 1 unit same as Class 1a 4c Commercial seasonal recreational residential same as Class 1a b Nonprofit community service organization 1.5% Post-secondary student housing 1.0% a Manufactured home parks 1.25% Noncommercial seasonal recreational residential Same as Class 1a a, b Qualifying golf courses 1.25% Nonprofit fitness and recreational facilities in the metro area 1.25% 4d Low-income rental housing 0.75% 5 Unmined iron ore and low-grade iron ore 2.0% b All other property 2.0% a Exempt from school district referendum levies. b Subject to state general property tax, except for electric generating public utility machinery. 5

6 Minnesota State Tax Collections Fiscal Year 2013 All Funds - Net After Refunds FY 2013 Collections % of Amount Total (000 s) Individual Income Tax $9,012, % Corporate Franchise Tax 1,280, Estate Tax 158, General Sales & Use Tax 4,990, Liquor Gross Receipts Tax 77, Motor Vehicle Rental Tax 14, Motor Vehicle Rental Fee 1, Motor Vehicle Sales Tax 597, Motor Fuels Excise Taxes 862, Alcoholic Beverage Taxes 81, Cigarette Taxes and Fees 369, Tobacco Products Taxes and Fees 53, Mortgage Registry Tax 139, Deed Transfer Tax 75, Lawful Gambling Taxes 36, Pari-mutuel Tax 566 * Insurance Premiums Taxes 415, Health Care Surcharges 255, MinnesotaCare Taxes 513, Mining Occupation Taxes 19, State Property Tax 811, Contamination Tax 299 * Motor Vehicle Registration Tax 622, Airflight Property Tax 12, Aircraft Registration Tax 8, Rural Electric Co-ops 50 * Solid Waste Management Taxes 70, Metropolitan Landfill Fee 3, Total $20,488, % * Less than.005% 6